FINLAND. The annual Nordic Travel Retail Seminar took place on Thursday in Helsinki, with some thought-provoking contributions from speakers from outside the industry, as well as strong industry presentations on regulation, the Chinese consumer and the future for airlines. The event was moderated by The Moodie Davitt Report President Dermot Davitt.
Nordic Travel Retail Group (and Viking Line Purchasing & Sales Manager) Chair Eva Rehnström introduced the theme, which centred around tackling the opportunities and challenges of a fast-changing world.
“The way in which we dress, eat, shop and travel is changing fast. It can be frightening but it’s also likely that the good will outweigh the bad.”
The event covered many external influences on the travel retail business, ranging from the changing political and economic world today to the regulatory environment – and how these are changing the shopper mindset.
Morning keynote speaker Fredrik Reinfeldt – who was Prime Minister of Sweden from 2006 to 2014 – was among the highlights.
He discussed people and societies’ nervousness about change – “we say we like it but we end up just defending our market share”. He noted three key factors – geopolitical change, digitalisation and demographics – as among the influences on how the world of tomorrow will look.
Reinfeldt said he hoped for a ‘softer’ Brexit than has been proposed by the UK government recently, noting how many governments are now trying (in vain) to turn back the clock on their societies, with protectionism a particular negative from the USA to the UK and other states.
He noted how people hail the impact of digitalisation without wanting to acknowledge the disruption that often comes with it, such as job losses.
And he underscored how demographic change – including the surging growth of populations in Asia and Africa – would shape the future and create the consumers of tomorrow.
ETRC Secretary General Keith Spinks provided a valuable overview of the Brexit question. He reaffirmed that as things stand, once the UK exits the EU it should mean the return of duty free sales between it and the other 27 member states.
But he warned: “The Brexit process will touch on all areas of legislation including excise and VAT legislation. We need to ensure that neither European or national legislation is changed, or introduced, during the Brexit process that would undermine or delay this opportunity.”
Citing the importance of timing, he said it is “essential to ensure that any interim or phased withdrawal agreement does not delay the UK becoming a third country”. The UK must also be convinced by stakeholders in the industry to allow the return of duty free.
Underlining the importance of industry collaboration, Spinks said there could be potential opposition from:
- Health Ministries and organisations
- Health NGOs
- National retail associations
- Ministries of Finance
He did not quantify the sales impact of a return to a duty free regime in the UK but said a study (by York Aviation) would be concluded soon on the likely impact on the UK and Ireland.
From a Nordic viewpoint, he said it was vital to engage soon with legislators to emphasise the strategic return of duty free sales, and to evaluate the potential impact on the regional business in terms of jobs and revenues. The opportunity for the maritime business – crucial in the Nordics – is a huge one, he added.
“We need to place the benefits within the context of the wider economy and infrastructure financing of the Nordic and Baltic countries,” he noted.
Required actions include:
- NTRG members engaging with national governments and MEPs on the potential benefits
- Ensuring national governments represent the industry position at EU level during Brexit negotiations
- Effectively briefing governments’ Brexit staff
- Finance Ministry and Transport Ministry to be contacted, and met with, as a priority
- Regular contact with key officials
In summary, Spinks said: “An intensive campaign is underway in the UK to obtain the support of MPs and government officials. This needs to be mirrored across the EU, especially in countries with significant traffic flows to the UK. It is critical that EU Member States recognise the benefits from a return of tax and duty free sales, and support from all industry partners is crucial for success.”
The discussion then turned to another major factor that will influence the future of the business: the Chinese consumer.
Hannes Koch of Travel Retail Cooperation and Jessica Lee of Jelladin International offered their insights into the changing face of the Chinese consumer.
They emphasised some key messages to winning over Chinese consumers.
Advance marketing is crucial, notably through social media – with digitalisation in the shop necessary too – too few European retailers offer visitors WeChat/Alipay payment options, noted Koch.
Ms Lee talked in detail about behaviour and expectations among these consumers. She cited the use of mobile apps for both information and transactions, and importantly noted how Chinese plan in great detail online the destinations they will visit on overseas trips – and make firm choices on transport, accommodation, food and shopping before they leave home.
She said: “Chinese consumers are willing to pay more for a good experience, they are ready to take time for a deeper dive into the local culture but want no (negative) surprises on their trips.” She also offered some insights into how to segment these consumers and how to communicate with them.
Summarising, Koch said: “Focus on price, image and trends and make the shopping experience pleasant and easy. Work with discounts and entertain them.
“The Chinese consumers have changed dramatically in the last five years and continue to change at an unseen speed. They are the most informed and demanding customers you can get. They compare and share their experiences in real time and they expect to be targeted very specifically. Chinese consumers can be a clear game changer for your business.”
Former Finnair Deputy CEO Ville Iho spoke about the travel eco-system that airlines inhabit, and about the economics of airlines and where retail fits into that in a changing world.
Crucially, asked whether he foresaw new types of partnerships between airlines, airports and retailers in the e-commerce age, he said these would develop, but that the winners would be those that offered the most value to consumers in the travel chain. “It’s still an evolving story,” he said.
In a memorable closing address, influential economist, writer and public speaker Kjell Nordström talked about how the future might shape up for societies and businesses.
In a wide-ranging presentation, he noted the rise of Asia and Africa as influences on global consumption and reinforced his view that “everything that can be digitised will be digitised”. He noted too that most of the world’s population would ultimately reside in one of around 600 cities and cited the emergence of the local or regional (as opposed to international) power brand.
The event concluded with a stunning Gala Dinner at the Restaurant Savoy, one of Helsinki’s best-known restaurants.
Update: Selected images from the Nordic Travel Retail Seminar
